Human embryonic stem (ES) cells not only provide a continuous cell source for potential cell therapy but also offer an otherwise inaccessible system to unveil events of early embryonic development in man. This proposal will examine how the earliest neural cells, neuroepithelia, are specified from the naive ES cells, and test the hypothesis that neural specification in humans employs a similar mechanism as in vertebrate animals. We will first re-create in culture the developmental events of the first 2-3 weeks of human embryonic development during which ES cells (NIH Registry WA01 and WA09) will be differentiated through stages of embryoid bodies, primitive ectoderm-like cells, neural tube-like rosette ceils until the neural precursor cell stage. The stage-specific events will be defined by DNA microarray analysis along with the characteristic morphologic changes. Using this stepwise differentiation culture model system, we will then examine neural- inducing and inhibitory factors on neural specification from human ES cells. The identity of ES cell-derived neural precursors will be determined by the differentiated progenies of clonally derived cells in vitro and in vivo. The function of the in vitro generated mature neural cells will be assessed using electrophysiological techniques to measure action potentials and synaptic communication in neurons in culture and after transplantation into mouse brains. This study will lead to an optimized procedure for generating enriched or purified neural precursor cells, which will lay the groundwork for potential future use of human ES cells in the treatment of neurological injuries and diseases.